Israeli citizen and former high-living real estate investor Eitan Maximov was found guilty in a jury trial yesterday for his role in a "cash-back" mortgage-fraud scheme.
He stands to get between 14 and 17.5 years in prison at his sentencing hearing, scheduled for February 27 before U.S. District Judge David G. Campbell.
Maximov was one of a few dozen people indicted in 2009 following an FBI investigation known as "Operation Cash Back," playing a leadership role and netting hundreds of thousands of dollars.
Kevin Rapp, who prosecuted the case for the Arizona U.S. Attorney's Office, explains the scheme in this excerpt from a transcript from the court case:
In general terms, Judge, what they do is they find a seller willing to sell the property, Maximov does, approaches them, increases the sale price of the house by -- through an appraiser who is willing to puff up the price.
The difference between what the seller wants to sell the house for and the difference between the inflated value of the house, Mr. Maximov is able to get the escrow officer to give that money in the form of cash back to him, and he has that wired to one of the many LLC's that he has on his -- that he's incorporated, Connect America Worldwide, Aragon Stables, Eilon Properties.
He then takes that money, keeps it for his own, pays some kickbacks to real estate10agents, escrow officers, and the like. The property -- The person whose name is on the property does not have the financial viability to sustain the payments because the [straw buyer], who Mr. Maximov directed to fill out the uniform loan application -- they've inflated their gross monthly income, their assets, their liabilities, put down businesses -- and, indeed, Connect America Worldwide -- that they never worked for, so that they would qualify for the loan.
They can't qualify for the loan. They never make any payments. The houses go into foreclosure.
Throughout the time of the fraud, Maximov lived in luxury at Esplanade Place on Camelback Road while his victims -- banks -- lost millions. He also stiffed his wife and kids on their child support payments.
Maximov was taken to jail after the trial -- prosecutors argued that the legal resident was a flight risk, even though he had flown to Israel in May of 2008 after his father died and returned voluntarily to the United States even while under investigation. He was arrested in front of other airline passengers after that flight arrived in Phoenix.
"During the height of the real estate boom, this defendant saw an opportunity to profit and he took it," said acting Arizona U.S. Attorney Ann Birmingham Scheel in a written statement.
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